The “sea of red” in the mortgage bond market probably isn’t going to be enough to get the Federal Reserve to reduce interest rates, according to industry experts.
Most banks are better insulated than Silicon Valley Bank from duration risk in MBS and similar holdings, according to Federal Reserve Chair Jerome Powell. (Includes two data charts.)
With a bank liquidity crisis taking seed, some nonbank CEOs started asking a basic question: Are our escrows safe? What about our corporate deposits? Needless to say, it’s been an interesting week.
Some banks hike their use of FHLBank advances when a run on their deposits and the inability to sell their MBS holdings cut into liquidity. This strategy doesn’t seem to work for all banks.
While the GSEs are under mandates to shrink their retained portfolios, Freddie’s holdings increased in the final three months of 2022. (Includes data chart.)
Appraisal reduction amounts, which measure a new appraisal’s shortfall compared to the loan’s unpaid balance, are generally considered an indicator of expected losses.
Despite a sharp decline in primary market originations, the agency MSR market continued to grow in the fourth quarter. Ginnie servicing was the fastest-growing segment. (Includes two data charts.)